Sam Bankman-Fried’s crypto empire blew up in spectacular fashion at the beginning of this month, and questions continue to swirl around the motives and mechanics that caused FTX and its sister company, Alameda Research, to collapse.
Among the more unprecedented elements of the FTX saga has been the fact that Bankman-Fried, who was raised by two lawyers, can’t seem to keep his mouth shut despite mounting legal threats.
After cryptic tweet threads and a viral DM exchange with a Vox reporter in which he said “f-ck regulators” and admitted that his philanthropic identity was largely manufactured for PR reasons, Bankman-Fried’s actual voice is being heard for the first time post-FTX-collapse with newly-released audio from Tiff Fong – a crypto investor-turned-whistleblower who initially gained attention for leaking audio that showed Celsius, the now-bankrupt crypto lending platform, planned to use a cynical “crypto-based solution” to repay users of its Earn Lending platform.
In a phone call with Fong on Nov. 13 – just two days after FTX filed for bankruptcy protection – SBF rehashed many of the same defenses and rationalizations for his behavior that he had shared previously in other places to explain what went wrong. In general, Bankman-Fried’s defense was (and continues to be) that he greatly mistook how leveraged he was.
This explanation is wholly unsatisfying given that it fails to address precisely how FTX and Alameda misappropriated billions of dollars in FTX user deposits.
“You don’t get into a situation like I got in if you make all the right decisions,” Bankman-Fried admitted once again.
Unsurprisingly, Bankman-Fried’s lawyers were unhappy with his decision to speak out in the early days of the FTX fiasco.
“You have to promise that you never, ever, ever say you f-cked up again,” Bankman-Fried said his lawyers told him. “I told them to go f-ck themselves.”
On the call, Bankman-Fried provided some context around why he – for a brief time after pausing the FTX platform – re-opened withdrawals just for residents of the Bahamas, where Bankman-Fried and FTX are based.
Initially, FTX claimed that this was to comply with requests from Bahamian regulators. The Bahamian government disputed this, and on his call with Fong, so did Bankman-Fried.
“I gave [the Bahamian government] a one-day heads-up that we were going to do it. They didn't say yes or no. They didn't respond, and then we did it. The reason I did it was it was critical to the exchange being able to have a future,” said Bankman-Fried.
“You do not want to be in a country with a lot of angry people in it and you do not want your company to be incorporated in a country with a lot of angry people in it,” he continued. “This was us trying to create a regulatory pathway forward for the exchange just to like kind of appease the citizens of the country that we’re currently in.”
As for whether Bankman-Fried created a “backdoor” to discreetly move user funds to Alameda without attracting attention as reported by Reuters, Bankman-Fried suggested that “I certainly didn't build the back door in there and I don't know exactly what they're referring to.”
Bankman-Fried said that he couldn’t have built a backdoor since “I don’t even know how to code,” though this defense doesn’t really address Reuters’ core claim – which is that he used a backdoor, not that he built one.
As for why Bankman-Fried continued to speak out rather than remain silent after his house of cards came toppling down, “at the end of the day, I’m starting to trust my gut on things like this,” he said.
Although the Nov. 13 call with Fong is the first time SBF’s voice has been heard since the start of the FTX/Alameda scandal, he plans to speak with the New York Times’ Andrew Ross Sorkin at the DealBook Summit later this week.
